Matt Eley: Spirits leveller is not as fair as it first appears

Both Diageo and the Scotch Whisky Association (SWA) have put forward a compelling, if superficial, case to the Treasury calling for a radical reform of the way alcohol is taxed.

Put simply, they think every unit of alcohol should be taxed the same. So the, roughly, 2.5 units in a 4.5 per cent beer would return the same revenue for the government as the alcohol in a 250ml glass of 10 per cent wine.

According to Diageo, and indeed the SWA, "alcohol is alcohol" and people should pay the same for drinking it whether it is in a pint of Guinness or a glass of Johnnie Walker.

Sounds reasonable, right? And initially the 'equalisation' argument does sound well-reasoned in it simplicity.

But therein lays the problem: alcohol might be alcohol but producing it and the manner in which it is consumed vary wildly.

This is why the duty system, almost unfathomable in its complexity though it is, takes into account factors such as production costs and why the government is considering hiking tax on drinks that appeal to 'binge-drinkers'.

Beer costs roughly three-and-and-half times more to produce than white spirits, and this is reflected in the duty regime - though the likes of CAMRA and the British Beer & Pub Association will surely tell you it is not reflected enough.

They will also tell you that Diageo's equalisation plan would add about 17p in tax for every pint of beer produced - we could only guess what that would do to the price of beer at the pump (but you wouldn't get much change from a fiver).

So what soon becomes apparent with the spirits producers plan for parity is that they are not really trying to create a level playing field. There would be losers in this plan - brewers, pubs and customers to name but three.

With that in mind the brewers are keen for the government to give tax breaks to lower ABV beers - using arguments such as provenance, health benefits and job creation to support their claims.

What is clear is that a government intent on addressing the social ill of 'binge-drinking' while simultaneously needing to plug a gaping financial hole will increase duty.

This is why it is imperative for all those concerned about the future of our trade to put forward coherent arguments that ensure that any changes to the duty regime do not deliver a knock-out blow to the pub industry.